Embracing Sustainability - Evonik Industries · Global R&D network: ~2,800 employees 40 sites Joint R&D project “Rheticus” to de-monstrate feasibility of artificial photosynthesis

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Embracing Sustainability

Corporate Responsibility Relations | February 2019

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Table of contents

1. Evonik – a global leader in specialty chemicals

2. Our sustainability commitments, strategy and targets

3. Value chain and products

4. Our focus in 2018/2019

5. Sustainability at Evonik – external recognition

Embracing sustainability | February 2019

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A global leader in specialty chemicals

Embracing sustainability | February 2019 | FY 2017

Employees

>36,00016.4%Profitability (adjusted EBITDA margin)

€2.36 billion Adjusted

EBITDA

>80%of sales gained from

leading market positions€14.4 billionsales

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Healthy balance between growth and financing businesses

NUTRITION & CARE RESOURCE EFFICIENCY PERFORMANCE MATERIALS

€4.5 bn €5.4 bn €3.8 bn

Meeting specialty chemicals characteristics

Focus of capital allocation

Growth

businesses

Growth

businesses

Mature

businesses

Mature

businesses

Mature

businesses


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Corporate strategy agenda 2018

Targeting excellence in three strategic focus areas

More balanced and more specialty portfolio

Customer-focused innovation

Open & performance-oriented culture

Four growth engines as drivers for

profitable growth

Specialty Additives

Health & Care

Smart Materials

Animal Nutrition

Building a best-in-class specialty chemicals company

Adj. EBITDA-margin rising from 16 – 18% to 18 – 20%; GDP+ volume growth

Profitable

Growth

Strategy execution on

track

Divestment of

Methacrylates Business

in preparation

€200 m cost savings p.a.

until 2021; €50 m in 2018

Complexity reduction

via portfolio streamlining

New corporate values as

guidelines for cultural

change


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Table of contents



3. Our value chain and products




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Our sustainability commitments


The global chemical industry’s

initiative to improve health,

environmental performance,

enhance security, and to

communicate with stakeholders

about products and processes

An alliance of VCI, IG BCE and

BAVC underpinning

sustainability as a

guiding principle of the chemical

industry in Germany and

providing inspiration for the

international community

Aligning companies‘ operations

and strategies with 10

universally accepted principles

in the areas of human rights,

labor, environment and anti-

corruption

Protecting people and the

environment, treating partners

fairly, and focusing on the needs

of customers as core beliefs for

everyone at Evonik

Containing corporate values and

principles, governing conduct of

all Evonik employees; externally

operated whistleblower system

Evonik‘s internal commitment to

human rights, core labor

standards, international

standards and principles of

conduct

Ex

tern

al

Inte

rna

l

Responsible Care Chemie3UN Global Compact

ESHQ Values Code of Conduct (CoC)Global Social Policy

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Our sustainability management


Thomas Wessel

Executive Board

Member

responsible for

sustainability

(CHRO)

Executive Board – Overall responsibility for sustainability

Responsible Executive Board member – Chief Human Resources Officer (CHRO)

Executive Committee HR

Corporate Responsibility Panel

Global Corporate Responsibility Committee

CR Expert Circles

Segments

Corporate Divisions

Regions

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Our sustainability strategy


We are convinced that sustainable and responsible business activities

are vital for the future of our company

Sustainability core element in corporate claim “Power to create”

Evonik positions sustainability close to its operating businesses

Focus of sustainability activities on six material areas of action

Strategy

and Growth

Governance

and

Compliance

Employees

Value chain

and ProductsEnvironment Safety

Sustainability strategy

taking up growth engines identified in our corporate

strategy and defining six areas of action geared to

balanced management of economic, ecological and

social factors.

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Our sustainability targets 2018 and beyond


Strategy and Growth Governance and Compliance Employees

Environment SafetyValue chain and Products

Validate materiality analysis

Identify SDGs of most relevance

for the Evonik Group

20% women at 1st and 2nd

management levels below

Executive Board (2019)

Measure and increase employee

satisfaction

More diversity by increasing

number of female managers

Extend impact analysis of our

business along the value chain

≥ 20 supplier sustainability

audits according to TfS1

> €1 bn additional sales in

R&D growth fields (2025)

Reduce

specific GHG emissions by 12%

(2020)

specific water intake by 10% (2020)

Accident frequency rate ≤ 1.30

Incident frequency rate ≤ 1.10

Occupational Health

Performance Index ≥ 5

1) Under the shared audit principle of the „Together for Sustainability“ initiative

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Safety is at the top of our agenda


1) Number of work-related accidents involving Evonik employees and employees under the direct supervision of Evonik per 1 m hours worked 2) Number of work-related accidents involving non-Evonik employees

resulting in absence from work per 1 million working hours 3) Process Safety Performance Indicator according to Cefic, covering incidents involving the release of substances, fire or explosion, even if there is little or

no damage. It is calculated from the number of incidents per 1 million working hours of Evonik employees

Occupational safety

Incorporation of safety performance in remuneration systems; global culture initiative “Safety at Evonik“ firmly established

Accident frequency rate2 for

contractors‘ employees

slightly deteriorated;

in-depth analyses initiated

Accident frequency rate1

for Evonik employees

slightly improved;

target 2017 (≤1.30)

achieved

Incident frequency rate3

on good level;

target 2017 (≤1.10)

just narrowly missed

Plant safety

2013 2014 2015 2016 2017

0,95

1,180,97

1,24 1,16

2013 2014 2015 2016 2017

3,203,60

2,90 3,153,52

2013 2014 2015 2016 2017

1,23

1,401,29

0,951,11

First steps taken to

introduce new IT- platform

covering core ESHQ work

processes

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Ambitious environmental targets 2004 – 2020


Specific GHG emissions1 Specific water intake2

50

60

70

80

90

100

110

120

130

50

55

60

65

70

75

80

85

90

95

100

200

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200

5

200

6

200

7

200

8

200

9

201

0

201

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201

2

201

3

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5

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6

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7

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9

202

0

Target 2004-2014 2004-2014

Target 2013-2020 2013-2020

50

60

70

80

90

100

110

120

130

140

150

160

170

180

50

55

60

65

70

75

80

85

90

95

100

200

4

200

5

200

6

200

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201

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201

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0

Target 2004-2014 2004-2014

Target 2013-2020 2013-2020

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achieved in 2012

20% from 2004-2014

12% from 2013-2020

20% from 2004-2014

10% from 2013-2020

achieved in 2012

1) Energy- and process-related emissions as defined by the Greenhouse Gas Protocol, scope 2 emissions calculated using market-based method 2) Reporting on specific water intake has been recalculated

retrospectively. Based on our regular analytical verification - checks on random samples of reported data and audits - gaps in reporting in one organizational unit were identified and corrected 3) Start-up of hydrogen

peroxide facility in Jilin (China).

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Managing Evonik‘s carbon and water footprints

Carbon footprint Water footprint

31% reduction of specific water intake achieved in

2004 – 2012

Target for 2013 – 2020: 10% reduction (basis: FY 2012)

Water scarcity footprint calculated for

25 most relevant raw materials

purchased by Evonik

No exposure to water stress based on

risk analysis completed in 2017

101,8 million metric tons CO2eq1 avoided emissions by use of

selected Evonik products2 compared to conventional

alternatives on the market

Evonik Carbon Footprint: 26.9 million metric tons CO2eq


+21%

+24%

+41%

1) Carbon dioxide equivalents 2) „green tire” technology, amino acids in animal feed, foam stabilizers for insulation materials, and oil additives in hydraulic oils

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We accept responsibility along the value chain


Upstream

Responsibility within the supply chain

Code of Conduct for Suppliers (2017: ~34.000)

Founding member of “Together for Sustainability”

industry initiative

Gate to gate

Advanced chemical processes being constantly refined

Well-stocked innovation pipeline

Downstream

Enabling customers to

reduce their own ecological footprints

meet their sustainability targets

Value chain and Products

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Upstream: Responsible supply chain management


Evonik founding member of

“Together for Sustainability” (TfS)

initiative of chemical industry

driving transparency and

sustainability along the supply

chain

Evonik Chief Procurement Officer

serving as TfS President

Shared results

on

a web-based

collaborative

platform that

Shared supplier

engagement

program

of leading global

chemical

companies

Official

partnership:

European

Chemical Industry

Council (Cefic) and

TfS

Third party

assessments

and audits

managed by

selected partner

EcoVadis

Minimizing efforts

for suppliers and

customers

by replacing

multiple individual

assessments by a

single evaluation

Shared results on

a web-based

collaborative

platform that shows

the suppliers´

scorecard

Cooperation with

Chinese

Petroleum and

Chemical Industry

Federation

(CPCIF)

Setting a global

standard

for sustainable

supply chains in

the chemical

industry

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Upstream: Responsible supply chain management


Our targets 2018

Conduct ≥20 supplier sustainability audits under the shared audit principle of TfS

Continue supplier analysis by reviewing ≥80 TfS assessments

Evaluate sustainability performance of 90% of suppliers of critical raw materials

by 2020 (year-end 2017: >70%)

1,794TfS assessments

441TfS audits

>75%of Evonik's purchasing

volume covered by TfS

assessments

TfS process

Evonik process

a alternatives

Before entering into a

business relatonshipDuring the business relationship

28thereof Evonik

149thereof Evonik

Validity of audits:

3 years in general

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Gate to gate: Sustainability evaluation part of our R&D

394 m €R&D expenses

€458 m

394

413

434438

458

+ 4% p.a.

Systematic sustainability assess-

ment for strategic R&D projects2

projects

~230New patent applications filed

~26,000Patents and pending patents

52%of sales patent-protected

R&D highlight: Siemens and

Evonik combine expertise

R&D pipeline well stocked;

focus on larger, mid- and long-term projects

>500

R&D expenses

R&D expenses to sales: 3.2%people

planet

profit

Global R&D network:

~2,800 employees

40 sites

Joint R&D project

“Rheticus” to de-

monstrate feasibility

of artificial

photosynthesis

R&D expenses

2013–2017 in € m

Evonik intensifies R&D

into regenerative

medicine: Tissue

Engineering Project

House in Singapore

Current market growth1

of ~30 % p.a.; market

volume1 of US $3 bn

by 2021


1) Estimations 2) Idea-to-People-Planet-Profit (I2P³)

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Gate to gate: Our innovation targets

Embracing sustainability February 2019

Group level: 3.2%

Growth engines: 4 – 6%

Innovation pipeline

Sustained value enhancement;

current value in lower

single-digit billion € range

Sales with new1 products

and applications

Medium term: 16% of sales

2017: ~10% of sales

R&D expenses to sales

Evonik Innovation Growth Fields: 25% p.a. CAGR

Additive Manufacturing

Additional contribution to sales

2017/2018: ~ €200 m

2025: > €1 bn

1) Developed in past 5 years

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Downstream: Sustainability analysis of our business


of sales generated with products for resource-efficient applications150%

70%

94% of Group sales covered by sustainability analysis; methodology available at Evonik website

of sales covered with

life cycle analyses

1) Products that make a measurable contribution to improving resource efficiency in the use phase

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Downstream: Sustainability as growth driver1


Growth trends and drivers „Sustainable“ products

Rising requirements on additive

effects

Need for increased product

performance and efficiency

Specialty Additives

“Small volume,

big impact“

Market growth

in %

Health & Care

Preferred partner

in Pharma and Cosmetics

Smart Materials

Tailored functionalities for

sustainable solutions

Animal Nutrition

Comprehensive portfolio for

sustainable food chain

Increasing health awareness

Bio-based products and

eco-safe cosmetics

Trend towards resource efficiency

in highly-demanding applications

Engineered materials to fulfill high

performance requirements

Sustainable nutrition

Improving food quality and

safety

Amino acids for animal nutrition

Probiotics

Silica & silanes („green“ tire)

HPP2 for lightweight applications

or 3D-printing

Membranes for biogas upgrading

Pharma polymers

Oleochemicals

Advanced biotechnology

Additives for eco-friendly coatings

PU additives for insulation

Oil additives for fuel savings

5-7

5-6

5-6

4-7

1) Examples | HPP = High Performance Polymers

Growth engines

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Products with significant contributions to sustainable development1


CALOSTAT®

purely mineral high-perform-ance insulation material; fullyrecyclable; incombustible

POLYVEST® HTfor sealing compounds for insulating glass windows (triple glazing)

VESTENAMER®

process additive allows rubber waste to be processedto low-noise asphalt

SEPURAN®

customized hollow-fibremembranes for efficientbiogas purification

TAICROS® Crosslinkers for photovoltaic cell encapsulation

DYNAVIS®

oil additives for energy-efficient hydraulic fluids

Silica-organosilane reinforcing systemfor „green tire“ technology

Catalyst NM 30for cost-efficient biodieselproduction

Insulation & Circular Economy Mobility Renewable Energies

ROHACELL®

light-weight technologyfor automotive and aircraft industry

Crosslinkers, silica,oil additives, siliconeepoxy resins for wind power

DRIVON™ technology for cost-efficient engine oils and transmission fluids

1) Examples

PU-Additives for furniture applications and the automotive industry (low VOC)

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In 2018/2019, our focus is on…


Sustainability analysis of our business

Impact valuation of our business activities

along the value chain

Identification of most relevant SDGs for the

Evonik Group

Training activities on human rights for Evonik

employees

Continuous improvement in reporting

2017: First Non-Financial Report

2017: First Sustainability Report according to GRI Standards

2018: Project „Fast Close“ for Sustainability Report

UN Sustainable Development Goals (SDGs)

Human Rights

Transparency

Impact assessment

Completion and external validation of new methodology;

new sustainability analysis will be conducted in 2019.

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Impact assessment: Our macro-economic impact in Germany

Embracing sustainability | February 2019 | FY 2017 | Total numbers include Evonik’s direct impact

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Impact valuation: Our business activities along the value chain in Germany


Impact of our business activities along the entire value chain, from the extraction of raw materials to the disposal of our products. The colors indicate the

monetary thresholds defined by Evonik. This model is based on monetized data for 2016.

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UN Sustainable Development Goals (SDGs)


2017: Our contributions to the SDGs 2018: Most relevant SDGs for the Evonik Group

https://corporate.evonik.com/en/responsibility/

unsustainabledevelopmentgoals

SalesGrowth

engines

Innovation

growth

fields

Internal

stakeholder

view

External

stakeholder

view

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Ratings & Rankings: Evonik well-positioned

Oekom Research (Prime Standard B-)

Sustainalytics (among Top 10 of chemicals sector)

Together for Sustainability/EcoVadis (“Gold Standard”)

Dow Jones Sustainability Indices

World and Europe

FTSE4Good Europe, FTSE4Good Global

STOXX® Global ESG Leaders

MSCI World ESG Leaders Index; Socially Responsible

Index MSCI Europe

Vigeo Eiris Euronext Index – Europe 120


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Renowned sustainability awards

National German Sustainability Award 2016

Winner in category „Research“

„Top 5“ in category “Germany‘s most sustainable large companies“

DQS1 German Award for Excellence 2017

Winner in category “Life cycle analysis“

PwC Building Public Trust Award 2017

recognizing Evonik‘s reporting; winner in category MDAX

Sustainable Business Awards Singapore

2017: Winner in categories „Energy management“, „Best Newcomer“, Special Recognition „Business Respons. & Ethics“

2018: Winner in categories “Business Responsibility & Ethics” and “Supply Chain Management”


1) DQS: globally active audit and certification company based in Frankfurt/Main

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Disclaimer

In so far as forecasts or expectations are expressed in this presentation or where our statements concern the future, these

forecasts, expectations or statements may involve known or unknown risks and uncertainties. Actual results or developments

may vary, depending on changes in the operating environment. Neither Evonik Industries AG nor its group companies

assume an obligation to update the forecasts, expectations or statements contained in this release.


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Documents

Embracing Sustainability - Evonik Industries · Global R&D network: ~2,800 employees 40 sites Joint R&D project “Rheticus” to de-monstrate feasibility of artificial photosynthesis